Oil and natural gas daily review (April 25, 2014)

WTI crude futures gained on Thursday after tensions between Russia and Ukraine heated up with Moscow threatening action if Kiev continues to crackdown on separatists. Concerns that the West may impose new sanctions against Russia stoked fears over possible supply disruptions and supported prices.

Meanwhile the positive data set from US sent prices higher. The Commerce Department reported that U.S. orders for durable goods rose 2.6% in March, beating expectations for a 2% gain. Core durable goods orders, which exclude volatile transportation items, rose 2% last month, far outpacing forecasts for a 0.6% gain. Separately, the Labor Department said the number of individuals who filed for unemployment assistance in the U.S. in the week ending April 19 rose by 24,000 to 329,000.

Natural Gas

Nymex natural gas futures declined on Thursday after the EIA report showed that utilities injected more gas in to the storage than market expectations. Stocks of natural gas in storage are currently at 899 bcf, still an 11-year low for this time of year, creating continued concern that utilities might not be able to rebuild inventory to a level that will avoid price spikes during the winter.

On the climate front, the latest U.S. computer weather model forecasts slightly cooler than normal temperatures over the next 15 days. NYMEX NG prices declined by – percent to close at $4.7/MMBTU.

Outlook

On an intraday basis, crude prices are expected to trade with a positive bias on good economic data from US that has raised prospects of growth in the country. Also, the tensions between Russia and Ukraine seem to have flared up raising concerns about supplies from Russia.

On the other hand, crude inventories in the US are at all time highs and that can exert downside pressure on prices. On the MCX, crude prices will trade positive taking cues from international markets and rupee weakness.